How to Choose a Credit Card in Four Steps

Finding the best credit card for your wallet isn’t always easy. Not only should you consider what you want in a card, you also have to think about what your credit needs.

Here’s what I mean: Certain credit cards are designed for people trying to build their credit history, while others are aimed at those with excellent credit already. Some cards offer travel or cash-back rewards, while others come with lower interest rates that can help people save money or get out of debt.

Offers matched to your credit profile

CardMatch™ by

Learn More

These factors and others all come into play as you shop for a card — but where do you start? This guide will walk you through the process of selecting a new credit card, step by step.

In this article

    Step 1: Check your credit score.

    Since the type of credit card you can qualify for typically hinges on your overall credit health, checking your credit score should be your first step. To get an estimate of your FICO score, you can sign up for a free service like CreditKarma or CreditSesameCapital One’s new CreditWise service also offers a free estimate of your FICO score once you sign up for a free account (you don’t have to be a cardholder).

    If you’re interested in the details on your actual credit report, you should check out Sponsored by the federal government, this website makes it possible to get a free copy of your credit report from all three credit reporting agencies – Experian, Equifax, and TransUnion – once per year.

    If you have good or excellent credit, you can generally qualify for just about any credit card on the market. If your credit is average or poor, you may not qualify for the best rewards cards on the market — or if you do, you might get stuck with higher interest rates. If your credit score is poor, you may need to apply for a credit card for bad credit – or even a secured credit card. Either way, it helps to know where you stand and what to expect before you apply.

    Step 2: Determine your priorities.

    Now that you know where you stand in terms of your credit score, you can decide on some credit goals. Do you want to earn travel rewards or cash back? Transfer a balance and pay down debt? Build credit from scratch?

    No matter your priorities, there’s a card – or even a handful of cards – designed just for your goals. Generally speaking, most credit cards fall into one of these categories:

    • Cards that help you build credit: Plenty of “beginner” credit cards exist to help people build their credit history. This includes both unsecured credit cards that extend a line of credit and secured credit cards that require a cash deposit. Student credit cards can also help young people build credit when they’re first starting out.
    • Rewards credit cards: Rewards credit cards let people earn cash back or points with each purchase that can be redeemed for airline miles, hotel points, or other benefits.
    • Cards with low interest rates: Low-interest credit cards offer generous interest rates that help consumers save money if they expect to carry a balance on a large purchase or need to pay off debt. Some credit cards even offer special introductory offers with 0% APR for anywhere from 12 to 21 months. These cards let consumers transfer their balances, save money on interest, and potentially pay down debt faster.

    Step 3: Ask questions and compare offers to narrow down your choices.

    Once you know which type of credit card might work best, you should compare offers to find the best deal. Look for cards that offer the most of what you’re looking for, whether that’s a lucrative rewards program, an extremely low interest rate, or a helpful balance transfer offer that will help you save money. Some cards may even offer a signup bonus worth up to a few hundred dollars in rewards points.

    Depending on the card type you choose, asking the right questions can help you whittle down your choices even further. Here are some questions you should ask depending on the card type you’re after:

    If you want to build credit:

    Building credit from scratch isn’t always easy, but certain cards make it possible. Student credit cards, aimed mostly at young people, make it easy to build a credit history with a small credit line and flexible terms. Secured credit cards, on the other hand, offer a small line of credit when you put down a cash deposit as collateral. Some questions to ask:

    • Does this card have an annual fee?
    • Do I need to put down collateral? If so, how much?
    • Can I upgrade this card later on?
    • What interest rate will I pay?

    If you want to earn rewards:

    Rewards credit cards offer a range of benefits that can depend on the card issuer and the rewards program itself. Most people sign up for rewards cards to earn airline miles, hotel points, flexible travel credit, or cash back. Here are a few questions to ask:

    • What type of rewards will I earn, and can I use them? For example, airline miles may not be useful if you loathe flying or rarely travel.
    • Does this card have an annual fee? If so, are the potential rewards worth the fee?
    • How much interest will I pay if I carry a balance?
    • Does this card come with travel benefits such as trip cancellation/interruption insurance, rental car insurance, or lost baggage reimbursement?

    If you want to save money on credit card interest:

    Some credit cards offer low ongoing interest rates or special promotions that can help you save money in the short term. Some cards even offer 0% APR for a limited time. Here are a few questions to ask as you explore these options:

    • Does this card charge an annual fee?
    • What is my interest rate, and how long does it last?
    • What will my interest rate be after the introductory offer?
    • If I’m transferring a balance, will I need to pay a balance transfer fee?

    Step 4: Select the card with the best combination of benefits.

    Comparing offers and asking the right questions is the best way to end up with the perfect card for your wallet. Once you complete this process, you should have a good idea of which card offers the right range of benefits for your needs, and whether you can qualify.

    Editorial Note: Compensation does not influence our recommendations. However, we may earn a commission on sales from the companies featured in this post. To view our disclosures, click here. Opinions expressed here are the author’s alone, and have not been reviewed, approved or otherwise endorsed by our advertisers. Reasonable efforts are made to present accurate info, however all information is presented without warranty. Consult our advertiser’s page for terms & conditions.

    Holly Johnson

    Contributing Writer

    Holly Johnson is a frugality expert and award-winning writer who is obsessed with personal finance and getting the most out of life. A lifelong resident of Indiana, she enjoys gardening, reading, and traveling the world with her husband and two children. In addition to The Simple Dollar, Holly writes for well-known publications such as U.S. News & World Report Travel, PolicyGenius, Travel Pulse, and Frugal Travel Guy. Holly also owns Club Thrifty.